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Maxing Out on Credit Cards: How Long Will It Hurt Your Credit?

When it comes to understanding how your credit score is affected by how much of your available credit you’re using, it can seem complicated. One reader found that a high utilization rate — that is, using a lot of their available credit — was the only negative factor on their credit reports, so they asked us how maxing out on credit cards can affect their score:

If the only bad thing on my credit report is high utilization rates, will it help my score if I use my credit card less? Will this always be used to calculate my score? Will it take the usual seven years to “disappear” from my credit report? If I close the account, will it “erase” the bad history of high utilization? Help!

Fortunately, in this situation it is much easier to build your credit scores than it would be for someone who has low scores due to negative information like late payments or defaults. However, just using your cards less won’t improve your score. Instead, paying down the balances that you currently owe is what matters here.

In this case, to see an almost immediate improvement, you’d need to pay down the balances on your credit cards. This will lower your revolving utilization percentage and increase your scores (as soon as the information is updated in your credit reports). Ideally, for the most possible points in this category, you’ll want to try and keep your revolving utilization percentage as low as possible — 10% or less of the credit limits is best for your scores. Over time, you’ll see how paying down your debt can affect your credit score. In fact, Credit.com’s Credit Report Card allows you to check your credit score for free, and it includes a breakdown of the main credit scoring factors to show you where you’re doing well and where you need improvement.

With utilization percentages, you don’t suffer for seven years, but rather, your score is calculated based on the balances currently being reported in your credit reports. As those balances change, your score will reflect those changes.

Closing the account wouldn’t “erase” the high utilization, and would actually end up causing more harm than good as far as your credit scores are concerned.